Short Term Rental with Owner Occupied Loan

[Charlie Miner]

I'm looking to purchase a duplex with an owner occupied loan and rent out one half while claiming the other half as my primary residence. I say this as I would be looking to airbnb my unit ideally 2-3 nights a week. Am I still an owner occupying the home if I am living in my unit half the time? Thanks for any advice/feedback.

[Kerry Baird]

What are you doing for the other nights? Just curious…

It seems to me that your residence is where you spend most of your nights, where you collect your mail, the place reflected by your driver’s license and so forth.  I’m in Florida and people can “owner occupy” a house that they don’t live in year ‘round, but come down to use in the winter months.  

[Michael Baum]

Hey @Charlie Miner. Welcome to the STR fray! You will have to check with your local municipality. I am betting that if they require you live onsite, it would be no different that if you had a home and were renting an ADU of some kind, but call and see what they say.

[Jeff Schemmel]

sounds like you may have read The House Hacking Strategy?? maybe not, if not you should read it!  Here's a link to the Minneapolis STR registration, where you can read about what the city cares about and what may be "between the lines".  The way I see it is, it's your house.  One of the many benefits of house hacking is there are so many ways to do it, and you should experiment to see what works for you.  My recommendation is to be OK with the returns without doing that, but reap the benefits of renting your side by the room whether that's long-term or short-term because it will amplify your returns.  One of the first questions I ask all of my clients who want to house hack is "are you willing to rent by the room?"  I specifically ask because you can get a real jumpstart in real estate investing by doing this - you have a great thought, and I think you should explore it but not rely on it to make a deal good.  Reach out anytime, i'm happy to help remove any hurdles for you to get started - mental or otherwise.

[James Hamling]

@Charlie Miner First and most important item to understand is the world of STR's and the various implications from prevailing governance too finance structures, is a world in refinement process and with that, continuous shifts.

These are shifting sands, the answers you find today may change tomorrow. Actually, I can all but assure they will change, several times, because it's a new segment, in terms of finance and governance. Remember, both view time differently, we may think in terms of days, weeks, months, they think in terms of decades. You will hear much in connection to local government and finance, speed and pro-active are not 2 of them right, so expect things to change with time. 

The positive is that odd's are your going to find all kinds of poorly defined grey-areas, well i should say depending on how you view things. This speaks to the 2 path's of human actions and which you fall into, if your a "ask for permission" person or a "ask for forgiveness" person. If the former, I say just walk away. If the later, congratulations, there is a ton of grey area to dance within or "engineer" some jazzy solutions to perform. 

As time goes, expect both finance and governance to in-fill these grey areas, and most likely not in favor to the investor. 

[Adam Tafel]

@Charlie Miner - from what I understand, you can't Airbnb your own half. I remember this question coming up with with a client a while back - although this was according to one specific lender with their own underwriting guidelines. STR related regulations used to be a huge grey area across the board, most industries have gotten hip to the times and have their rules. James is spot on - they are going to be changing all the time.

On Airbnb you have two types of properties - entire residence and shared residence. There is no regulation (to my knowledge) prohibiting you from renting a portion of your own residence on Airbnb, the lender should see this similar to renting a room on CL. I've personally done this on a few properties in the past, I call it "getting paid to live for free", haha. 

Also, as someone who has rented his personal residence on Airbnb many times in the past, don't underestimate the annoyance factor. It is very very time consuming. Best of luck! 

[Juan M. Gutierrez]

STR Operator from NJ, current have 3 arbitrage unit looking and looking to expand with my own rental properties. looking to connect with anyone looking to grow

[James Carlson]

Quote from @Charlie Miner:

I'm looking to purchase a duplex with an owner occupied loan and rent out one half while claiming the other half as my primary residence. I say this as I would be looking to airbnb my unit ideally 2-3 nights a week. Am I still an owner occupying the home if I am living in my unit half the time? Thanks for any advice/feedback.

 There is a lot to unpack in this seemingly simple question. I don't know the Airbnb laws in Minneapolis, but I follow the short-term rental rules closely in many cities here in Colorado. A few questions you might ask the planning department there:

Does your city have a primary residence rule? 
-- In Denver, for instance, you can only STR "your primary place of return" and no other place.
-- If it has a primary residence rule, is there a minimum number of nights you have to live in your property each year for it to count as your primary? Golden, a town just west of Denver, has a primary residence rule and stipulates you have to live in the place 10 months of the year for it to be considered your primary. Denver, on the other hand, has no set number of nights, so it's much more vague.
-- Finally, does the other side of a duplex count as your primary residence if you live in one unit? In Colorado Springs, for instance, if you live in one side, you can rent the other under its primary residence Airbnb law. In Denver, however, you cannot. Check to see how Minneapolis handles that.

Does your city allow Airbnb investment properties?
-- Several cities in Colorado, for instance, allow non-owner occupied short-term rentals, but they all vary in details that matter:
-- Can any one owner have more than one STR? For instance, Arvada and Wheat Ridge, suburbs of Denver, both allow non-owner occupied STRs, but in Arvada each owner can have up to 3 short-term rentals, whereas in Wheat Ridge you can only have one.
-- Even if you can have multiple STRs, can you have more than one STR per lot in Minneapolis? In Arvada and Wheat Ridge, for instance, you can only have one Airbnb per lot, so you couldn't rent the other side and your side. In Colorado Springs, however, you can rent one STR per legal dwelling unit, which allows you to rent both sides of a duplex. 

Good luck with the purchase. Airbnb can be good money. It's just good to work with someone who knows the ins and outs of the STR laws where you're buying. Cheers!

[Conner Olsen]

@Charlie Miner I did the same thing on my duplex! Check your local city laws about STR and HOA laws if you are in an HOA. My city required 30 day minimum stays so I rent mine for 1 month or more on Airbnb. I doubled my rental income and increased my cash on cash return by 20%.